You may think that all credit cards are the same, but that’s just not true. Credit cards differ in a number of ways, and one credit card might better fit your needs than another one. When you are looking for a credit card, it is important to consider these different factors. Here are three things to compare when choosing a credit card.
The Interest Rate
One of the most important things to consider when comparing which credit card is right for you is the interest rate. Most credit cards carry fairly high interest rates, usually in the double-digit range, and some as high as 20 to 25 percent. That can be a huge disadvantage if you are carrying a large balance. If you are the type of person who carries balances on your cards, then the interest rate should be a big factor in which one you choose. Credit unions and small banks often offer the lowest ratesIf you pay off your credit card balances each month, then the interest rate likely will be less of a factor for you. The better your credit score, the better your rates will be.
Another important thing to compare when choosing a credit card is whether it offers rewards. If you use your credit card a lot, then you may want to go with one that offers cash back or other perks. There are many cards these days that offer 1 percent cash back or more, and some offer additional cash back if you use your card at certain types of stores. Other cards offer airline miles and other travel perks, and some cards allow you to choose merchandise with your rewards. A good rewards card can make you quite a bit of money. For example, if you average $1,000 a month in credit card spending, a card offering 1 percent cash back will net you $120 over the course of the year. Some rewards may only be temporary as part of a promotion, so keep that in mind.
Fees are another important consideration when you are comparing credit cards. Most cards don’t have any fees unless you do something specific, such as transfer a balance or get a cash advance. Other cards have an annual fee, although such cards often offer something special in exchange for the fee, such as extra cash back, a very low interest rate or special perks, such as reduced hotel rates. You need to consider all the card’s fees and how they might affect you based on your usage patterns.
These are just a few of the most common credit card considerations. Other factors may figure into your decision. The key is to find the card that best fits your needs and spending habits.